Shopping for a new credit card: 3 crucial questions to ask
Matt Schulz has done thousands of interviews about money in his time as Senior Industry Analyst at CreditCards.com. He's been in The Wall Street Journal, New York Times and USA Today. He has appeared on Good Morning America, CBS Evening News, Fox Business Network and CNBC as well as hundreds of local TV and radio affiliates throughout the nation. Over the years of doing these interviews, he's seen many questions pop up over and over again - questions that impact nearly all Americans.
In this space, Matt will address these questions to help Americans get a better feel for how to find the right credit card, get it and use it the right way every day because he believes – and is living proof – that the right credit card can change your life.
What are the most important considerations with a new credit card?The right credit card, used the right way, can change lives for the better. However, too many people have cards that don’t fit their lifestyles and their spending patterns. Here are three questions that will help you pick the right card:
There is no one-size-fits-all answer for what is the best credit card.
If someone tells you there is, they’re either lying to you or they don’t know what they’re talking about.
The truth is that there are more flavors and varieties of credit cards than most people realize, and within each of those different types, there many options to choose from.
Being presented with all those options can be daunting if you haven’t really thought about what you’re looking for. CreditCards.com’s CardMatch tool aims to make that process simpler by pointing you to cards that you have strong enough credit to qualify for, but even that can just point you in a direction. Ultimately, you must decide for yourself what is best.
Where do you start, though? It’s a tough question whether you’re a student searching for your first card to build your credit or a credit card veteran looking for a big sign-up bonus to use for a summer vacation. Regardless of which side of the spectrum you fall on, the best advice is some of the oldest:
That can be easier said than done, but here are three simple questions that can help get you on the right path:
1. How will you use the card?
There could be as many ways to use a credit card as there are cards themselves.
- Will you use the card for most of your purchases or is it just for emergencies?
- Is it for personal use or for your business?
- Will you only use the card in the United States or will you sometimes use it internationally?
- Will you spend more on gas and groceries or on dining and travel?
- Are there specific stores that you use far more than others?
None of these questions should be stumpers, and your answers can help you narrow down your card options. For example, if you’ll frequently use the card overseas, you should find one that comes with no foreign transaction fees.
If you’ll be spending primarily on gas and groceries, you should look for a card that gives bonus cash back or miles for those purchases. Making the right choices can mean lots of extra money in your pocket.
2. What do you want to get from the card?
When it comes to card rewards, there’s never been a better time in the history of the credit card business to shop for a new card. Sign-up bonuses are bigger and better than ever, perks and freebies are plentiful, and options are seemingly endless. However, the biggest sign-up bonus isn’t necessarily the best fit for you.
- Do you prefer cash back or would you rather have miles or points?
- For cash back fans, would you rather have a simple, set-it-and-forget-it cash back card or are you willing to put in a little extra work to get bonuses based on what you spend during certain times of the year?
- For miles and points fans, is there a hotel chain or airline that you’re loyal to or do you just want the flexibility to use those points and miles anywhere at any time?
Perhaps you’re a student or a credit newbie and you just want a simple card that will help you build credit. In that case, a secured credit card can be a great choice.
Whatever you’re looking to get from the card, taking the time to think about it before you apply can make it far more likely for you to get it.
Tip: CreditCards.com’s CardMatch tool can help you narrow down your options by pointing you to cards that you have strong enough credit to qualify for. Knowing what you're looking for in a card will help you pick the right one among those you're most likely to qualify for, too.
3. Will you be able to pay your balance off each month?
This one’s huge.
If you’re likely to carry a balance on your card each month, a rewards card might not be for you. The last thing anyone should do is overspend just to get credit card rewards, no matter how lucrative those rewards might be. It’s simply asking for trouble.
Rather than chasing rewards, seek out low interest rates instead. The lower, the better.
- It’s important to understand that if you have crummy credit, you probably won’t get the lowest interest rate advertised with a card, but low interest is relative.
- If you have a card with a 25 percent APR and you can transfer that balance to a card with a 19 percent APR, you’ve really helped yourself out. Throw in a 0-percent introductory period and the savings grow even greater.
- Don’t forget about fees. Annual fees can be fine if they get you giant sign-up bonuses and super-cool airport lounge access. They’re not advisable if you’re trying to keep costs down and pay your balance each month.
Those are far from the only fees out there. The average card comes with about six potential fees – including annual fees, balance transfer fees, foreign transaction fees and late payment fees – though you can often avoid them if you shop around and use your card wisely.
While the offers currently available on the market seem might limitless, answering these questions will help you narrow down your options and find the right credit card – one that truly will suit your spending habits and financial needs.
See related: 3 simple keys to great credit
- 4 things no one tells you about your credit score – but should – Having good credit is not as hard as you think. Here are four things that will help you stay on top of your credit without too much hassle ...
- Credit card fees you can (and can't) negotiate with your issuer – Not all credit card terms are negotiable, but many of them, including late fees and interest rates, are. These tips will help you get better terms on your card ...
- 3 simple keys to great credit – If you're aiming for a perfect score, there are quirks and nuances and details you would need to know. For the rest of us, credit basically comes down to three thing ...